Digital Economy Bill – the impact of Brexit

On the 18th March, the Queen’s Speech set out the government’s legislative programme for the year ahead. This included the Digital Economy Bill, a piece of legislation which aims to ensure the UK is a world leader in digital provision.

However, as former British Prime Minister Harold Wilson once said ‘a week is a long time in politics’. The UK has unexpectedly voted to leave the European Union (EU). The Prime Minister has stood down, leaving a leadership contest in the Conservative Party. And many are uncertain about the future direction of the country.

In this article, I’ll outline the Digital Economy Bill, highlight some of the early commentary, as well as comment on the new political landscape the Bill now finds itself in.

Digital Economy Bill

The Digital Economy Bill focuses on five main areas. These include:

Fast broadband

The Bill introduces a ‘Broadband Universal Service Obligation’, providing all citizens and businesses with the legal right to have a fast broadband connection installed (of at least 10Mbps initially). This is similar to the telephone landline obligation which currently exists.

There is also an emphasis on cutting the costs and improving the processes for building broadband infrastructure. However, at this stage, there is very little detail on how this might be achieved, apart from introducing a new Electronic Communication Code and making changes to the planning system.

Consumers

New powers will be given to Ofcom, the UK communications regulator, which will enable them to request data, such as broadband speeds data, which will help consumers in choosing a provider. The Bill also attempts to make it easier for consumers to switch provider and to receive compensation when things go wrong.

Data sharing

Public bodies will be given powers to share information in an effort to combat fraud, which costs the country billions every year. For example, the cost of tax fraud was estimated to be £15 billion in 2011. Other notable measures include encouraging the use of data to provide better public services and identifying and helping people with debts at an earlier stage.

Intellectual property rights

The new Bill recognises that it’s important to support digital industries by addressing the difference in online/offline copyright laws. In addition, the process of registering copyright should be easier and cheaper.

Unsolicited Marketing

Consumers will be given further protection against spam emails and nuisance calls.

Early commentary

TechUK, industry body for the digital sector, has welcomed the new Bill, highlighting that if implementation is successful, the measures will play an important role in growing the UK’s digital economy. They do, however, note the need for careful consideration when making changes to the planning system and the Electronic Communication Code, alongside stressing the need to ensure changes to copyright law are technically feasible.

Geoff French, chairman of the Enterprise M3 Local Economic Partnership, has also welcomed the advantages the new Bill could bring to business. He highlights that there are still too many urban and rural areas that have low broadband speeds, affecting the growth of the digital economy, as well as the innovation, productivity and competitiveness of the wider economy.

Brendan O'Reilly, Chief Technology Officer at O2 UK, suggests that the planning system needs to be streamlined to allow the expansion of the network. He explains that the process of deploying a mast can take up to three years from start to finish. To emphasis his point, he contrasts the situation in the UK with that in South Korea, where three months to deployment of a mast is considered a long time. And although the new Bill may provide for this change, he highlights the need for collaboration between government and industry, and to think more of ‘UK plc’.

Landowners, however, have been less positive about the new Bill. Under new proposals, landowners would receive ‘compensation’ for masts located on their property; as opposed to the current system where they receive ‘market rate’. As Strutt & Parker telecoms specialist Robert Paul explains, this could mean landowners who used to receive £7,000-£8,000/year, would instead receive £200-£300/year, if classed as compensation. Mr Paul suggests that this could result in landowners taking their case to tribunals, with the result being expensive and time consuming legal challenges to the deployment of masts.

The elephant in the room – Techxit?

Before the referendum result was announced, Ed Vaizey, UK digital economy minister, stated that there would be a ‘significant economic impact’ if we voted to leave the EU, with uncertainty affecting investment decisions in the UK.

Although it’s too soon to comment on whether this is the case, there has been some notable reaction since the UK voted to leave the EU. Firstly, Ed Vaizey has stated that the Digital Economy Bill will not be delayed as a consequence of the result. However, unconfirmed reports (reported in the media) have suggested that the Bill will have to be delayed and its contents altered.

The Economist Intelligence Unit reports that the telecoms industry has been negatively affected by the result, with revenue forecasts being reduced from 29% to 23% by 2020. They highlight, though, that the Digital Economy Bill is still likely to contain regulation that supports increased investment, and that Brexit may even lead to a more favourable investment environment. Yet, the EIU also notes that other broadband targets, such as the elimination of rural ‘not-spots’ may be deemed less important.